In retrospect, I have no idea why this movie reminded my of The Big Lebowski (I think the Cowboy and the humor). Just thought that I'd mention that.

My real reason for this little addition is to comment on the idea of the ending being a flashback. Not to say that I disagree with Edame or Walter, but rather I just wanted to point out that in Lost Highway, one of Lynch's other surrealistic romps, the movie indeed is on a continual loop, in a way which can't be explained as a flashback.* Now, this is a different movie, and so this really shouldn't affect interpretations, but I just thought that I'd mention it.

* Perhaps this statement is too rash. Walter's interpretation of Lost Highway is that it too ends in not a flashback, but time travel. This is something I hadn't thought about (I don't have an interpretation of Lost Highway), and so will stop attempting to constrain other's interpretations so foolishly.

I have to say that upon watching this film for the first time, I was utterly confused, yet hopelessly drawn to trying to figure out what the hell was going on. It was like something in the recesses of your imagination, not quite formed but you know it will come together.

I would suggest that you not read ahead if you haven't seen the film, there are spoilers to follow.

While I admire Mindbender's interpretation, the symbolism is not something my mind can easily process. With this in mind I'll share a more literal interpretation, which, for me at least gave me some semblance of understanding.

First of all, let's look at the last third of the film (pretty much everything after the blue box is opened). For many people, this is where it goes from plain 'weird' to full-on surreal. You go from having a vague idea of what's going on to being turned upside down, characters are different people all of a sudden for example.
Let's just imagine for a second, that instead of this part of the movie being the end, and turning the truth on it's head, what if it was in fact the beginning, and the only truth in the whole film?

We have the hopeless Diane, a seemingly failed actress and now jilted lover of the cruel Camilla. Try to look back on those scenes and remember the people she meets as she is humiliated at Camilla and Adam's engagement party. Bitter and enraged she hires a hit-man to kill Camilla, who says he will leave a blue key with her when the job is done.

Now let's go right back to the beginning of the film, past the Jitterbug opening scene (how did Diane realise she wanted to become an actress?). We are shown a few seconds of blurred imagery and heavy breathing, before we seemingly rest onto a red pillow. Why is that exactly? We are going to sleep, into a dream world. The next two thirds of the film is basically Diane's dream, wish fulfillment on how her life should have been.
Instead of a failed actress she is Betty, a peppy would-be starlet waiting to be 'discovered'. Rita/Camilla escapes what could be described as an attempt on her life, and becomes completely dependent on the incredibly talented Betty.

If you remember the party scene, you will find that many of the people that Betty meets during the film are the people from that party. They are incorporated into her dream in various roles.
There's the seemingly vast conspiracy to cast an unknown blond called Camilla against the director's wishes. The bumbling hitman who can't do anything right. The cowboy, whom is only glanced at fleetingly, but has a large role in her dream. This is all Diane's wish fulfillment being acted out on her own private screen. There are various clues during the film that hint to Diane/Betty that she is dreaming, but she glosses over them (Betty and Rita calling the D. Selwin in the phonebook "Feels strange to be calling yourself.")
The most noticable is Club Silencio, this is her subconcious telling her in no uncertain terms that she is dreaming ("This is all, a tape"). Her uncontrollable shaking is signifying that she has 'woken up' in a sense (lucid dreaming?) and has realised what is going on. Shortly afterwards she disappears completely and we are snapped back to reality.

That is only a vague outline, highlighting a few points in the movie. There are countless more 'clues' and references that appear to validate this theory throughout the film, and half the fun is watching it again to spot them.
I didn't want to ruin the fun too much, just to get people going, to play it back in their heads and see how it all ties in. It's isn't the only theory and I'm sure there's no 'right' one.

It's a film I'll be watching for a long time.

If there's anything you feel I might have missed or that I should address to make this writeup clearer, just let me know.

I just received my copy of Mulholland Drive on DVD and it came with an insert with some 'clues' to the movie. I think they were originally published in The Guardian but didn't include them at the time in case I was stealing their copyright or something. It reads as follows:

David Lynch's 10 Clues to Unlocking This Thriller

Pay particular attention in the beginning of the film: at least two clues are revealed before the credits.

Notice the appearances of the red lampshade.

Can you hear the title of the film that Adam kesher is auditioning actresses for? Is it mentioned again?

An accident is a terrible event...notice the location of the accident.

The road begins at PCH to the east of Malibu, where it quickly ascends a steep canyon to the top of the rocky backbone of the Santa Monica Mountains. From there it twists and turns along this ridge, offering many scenic views of the ocean to the west and the hilly country to the east. After a while it travels along the edge of Malibu Canyon State Park and continues to the east.

Somewhere along the way, between Malibu Canyon and the 405 freeway, the road loses its pavement. Supposedly, this area is off-limits to the public, although I have not tried to access it. Also inaccessable are fire roads associated with Mulholland farther east, near the Hollywood sign. East of the 405, Mulholland meanders through mansions in the Hollywood Hills before eventually landing near Universal Studios.

Update: The section of Mulholland between Topanga Canyon and the 405 freeway is indeed accessible. However, it is closed to automobile traffic (with the notable exception of the lucky few, like myself, who work for the Park Service). Anyone is free to hike, bike, or ride a horse along the road, which offers excellent views of the Valley and Topanga State Park.

"Their endorsement
reflects the ultimate example of intellectual hubris -- the assumption
if you don't understand it, it must be brilliant. Because, trust me, as
someone who saw the 90-minute prototype back when ABC officials
first did, the film was stitched together with less of a blueprint than Frankenstein's
monster, abandoning any of the coherence the TV series contained and serving up a
surreal mishmash in its place."

A cursory scan through the American critics' opinions on rotten-tomatoes.com reveals exactly what Lowry is talking about: A yawning lack of symbolic interpretation and analytic digging. Yet this does not prevent these people, who have degrees in watching movies, for Christ's sake, from raving. I agree that this film is a roundhouse kick to the heart. It left me useless and aching for hours. It would be amazing even if you left your left brain at home. But here is where Lowry errs, for there are riches to be mined, if you take the time.

The last half hour of the film, shot months after principal photography with French funding once it was agreed the project could be stretched into a feature film, is inarguably different in tone, murky and sharp, cruelly flitting around, teasing you with arousal then punching you in the gut with shame and revulsion. At the very end, there are either several violations of laws of physics or someone has gone insane. You hope it's not you. Most see this and give up. Not me. I got it tagged and bagged, baby.

Of course this is just one subjective interpretation, and I can't prove it. And of course there is a degree of "That weirdo Lynch just does whatever he thinks is cool and creepy. There's no plan." Of course these theories will not fit 100% perfect. Of course. But just hear me out. Okay. Enough ado.

I'd seem a bit brighter if I'd posted this before edame's excellent writeup above. He's very close. The important factor he isolates is this: The end is a flashback. It takes place before the beginning. When we went into the box, we went into the past.

But wait, you say. Betty wasn't there in the past. And why is she Diane? Was she always Diane? HUH???

No, no, no. You're making things too complicated. You're falling for a red herring. What you witnessed is one of the oldest conventions in drama. Sophocles used it and Martin Lawrence still uses it. It's so simple none of these critics saw it coming. Ready?

One actress is playing two roles.

Where did I get this wack idea from?

It's in the damn credits.

Go to imdb.com and check it out yourself. Naomi Watts... Betty Elms/Diane Selwyn. Two different people. If it were a psuedonym there would be no need to list both. Now, if you believe me, the obvious question is WHY?

Well, because even though they're two different characters, they're really pretty much the same character. They both came to LA with the same dream. Diane was just like Betty maybe a year ago, maybe five. Hollywood has chewed her up and spit her out by now.

Movies work in a way books don't. Books are just words. You can create your own involvement in your head. Movies need you to get involved with the emotions on that person's face. If you don't care, you're not there. If Diane was played by another actress, you'd be all "Look at that crazy bitch! What's up with that?" But since you have a previous attachment to the person, you feel you know her, you don't judge her the same way. She's not evil, no one is. You know that it was the town that broke her down.

And without that identification, without that heartbreak and confusion, the last half hour just rotely answers your narrative quandaries, like the detective at the end of Psycho. Why did Diane kill herself? Who hired the hitman? What's Camilla's story? Who cares? Shame on you. Lynch knows what really matters. This isn't a dry parlor game. It's about your feelings, which can still be twisted and spun no matter what you think. Thoughts are a luxury of the fat and weak. Movies hit you in your reptile brain.

And movies is what this whole animal is really about. There's a reason why this is set in LA, and not New York or Chicago or anywhere else. The silencio scene is the key to whole enigma.

(While I'm at it: The blue key represents the money. The box is not a physical object. It is Rita's memory, it is the secret of what happened. Follow the money. That's how you'll find the assassin and the motive.)

J. Hoberman in the Village Voice nailed the central theme of this scene. I can understand how this is not immediately clear to those of you who haven't spent years studying this sort of thing. He says:

"Mulholland Drive's most frighteningly self-reflexive
scene comes when Betty and Rita attend a 2 a.m. performance—part séance, part
underground art ritual—in a decrepit, near deserted old movie palace called Club
Silencio. The mystery being celebrated is that of sound-image synchronization, which
is to say cinema, and the illusion throws Betty into convulsions."

This scene is about you and the actors you've spent the last hour and a half with. No hay banda--There is no band. This is a recording. No matter how much you care, it isn't real. She or anyone could drop dead. It's okay. We can fix it in post. The machine must roll on. The machine cannot afford to care.

Betty is what we think of as a good honest person. This realization never hit her before. Her tears don't matter to the girls upstairs. They aren't in it for the dreams or the pathos or the chameleonic thrill or even the joy of storytelling; all they see is dollar signs. She sees that she could carve out a whole fake kingdom here and have nothing left but an echo.

Rita's problems are worse. The first genuine human contact she could remember opened up the floodgates of her past. When she lost her memory she gained a soul, and now she knows that's incompatible with success. Heartbreak can't be your way of life if you're heartless, but now it's too late.

There was never any identity switching for Rita or Camilla. That was the life that Rita had before her "accident". Camilla is just the name of the next young starlet. It doesn't matter who.

The little teeny elderly couple is a reminder of the life Diane could have had. Commitment. Loyalty. Trust. She knows she's stuck in the wrong parallel universe, and she took her only way out.

The filthy man behind the dumpster is fear itself. In a town with a polished sheen, this is the form fear takes. He is all your nightmares. He holds them all within.

A few months ago, I rented David Lynch'sMulholland Drive and -- wow. What can I say? Just from watching that
one parody of Twin Peaks on the Simpsons, I assumed that David Lynch was just a madman who made no sense and got paid to
do it. But now that I've seen Mulholland Drive, I realize that he is, in fact, one of the most prominent geniuses in America
today.

A lot of people (and I used to be one of them) will tell you that David Lynch is just exploiting the phenomenon of
post-modernism to make his movies seem brilliant when they're really garbage. The thing is that these people are all
intelligent folks who have seen a lot of movies that are widely recognized as good. That's the problem. To truly appreciate
David Lynch, you have to throw away all traditional conceptions of what is "good" or "acceptable" or "logical." David
Lynch defines his own conception of "good." A lot of people would say that David Lynch's "good" is synonymous with everyone
else's "bad." Where I come from, we call that being an artist.

And Lynch is an artist. Allow me to refer you to a portion of Mulholland Drive where Lynch suddenly causes all the
characters to change which roles they're playing. A lesser director might have indicated what had happened in some way, but
not my David. He knows that his audience has already stopped trying to analyze, or "understand", his movie and are now just
sitting back and allowing the glorious pictures to float through their heads. When I walked out of the movie, I felt as though
eight dollars and three hours of my life had been wasted, but now I realize that money is no
price to pay for the wisdom that David Lynch imparted to me.

What is that wisdom? I don't know if I could describe it to you easily. I think you'd have to see Mulholland Drive
before you could truly understand the nature of the movie. You don't know how we all "change roles" when confronted
by a "Blue Key" and then have crazy encounters with "homeless men behind dumpsters". You don't realize that THE COWBOY
is watching over all of us and waiting in the Hollywood Hills for us to pour paint over our wives' jewelry and then slowly
go insane.

I idolize David Lynch's writing, to the point where I've begun writing a screenplay that imitates his style. Here's an
excerpt:

SCENE: Argyle Foster's apartment. He is
present with his good friend Damion Hall, with
whom he has just enjoyed a rousing dinner. We
hear the sound of a stampede of buffalo above.
ARGYLE
I could have sworn that she was on fire when
I pushed her over the cliff.
DAMION clutches his head between his elbows
and stands up.
DAMION
I have the strangest dreams... dreams of
fiction interspersed with reality like a fine
woven blanket of madness.
DAMION dies.
ARGYLE walks up to his body, checks for a
pulse, then calmly walks out the door. He
pushes a magic button on the wall and turns
into a leopard that calmly stalks away
through the hallways.

I like to think that I'm getting closer to what David Lynch sounds like (brilliance, that is), but I know that this screenplay
still makes a little bit too much sense. Do you see how Argyle and Damion are friends and they're in the same
apartment? David Lynch would never have made a mistake that stupid. If two of his characters didn't know each other, he'd
think of something incredible for them to do! Maybe they'd each murder a man on a boat sailing through the Caspian Sea while
gleefully singing "Yummy Yummy Yummy," by Ohio Express.

Misconception #2: Mulholland Drive just had that lesbian sex scene to give the men who were agonized by the movie
something to tide them over.

Wrong. That lesbian sex scene (Don't ask me who was in it, I can't keep track of those characters) was critical to the
integrity of the movie. I'd explain why to you, but I'm really not sure who those women were.

Misconception #3: Mulholland Drive is a festering pile of shit that David Lynch regurgitated from other nonsense crap
that he wrote and then slapped together for the big screen. In doing this, he made millions of dollars without ever exuding a
single drop of artistic integrity.